- September 23, 2023
- Posted by: legaleseblogger
- Category: Related News
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Should I Invest in a Rental Property or Continue with ETFs in my TSFA?
I am currently in a favorable financial situation where my home is nearly paid off and I have managed to save around 50K. This opens up opportunities for me to potentially invest in a rental property by taking out a mortgage. However, I am also considering investing this money in XEQT within my TSFA.
Considerations for Rental Property Investment:
While the idea of entering the real estate market is alluring, there are a few factors that I need to contemplate. Firstly, I already have a demanding full-time job which requires me to work 60 hours a week, and my annual income stands at 130k. Taking on the responsibility of managing a rental property might add extra strain to my already busy schedule. Additionally, being a landlord involves dealing with tax implications and the cost of property management. These factors make me question whether investing in a rental property is the right move for me.
AI Legalese Decoder to Simplify the Process:
Fortunately, there is a tool that can immensely assist me throughout this decision-making process – the AI Legalese Decoder. This advanced technology can help me navigate legal jargon and complex terms associated with rental property investment. By simplifying these legal complexities and providing easy-to-understand explanations, the AI Legalese Decoder enables me to make informed decisions with confidence. It ensures that I fully comprehend the tax implications and property management costs involved, aiding in my assessment of whether venturing into rental property investment aligns with my financial goals.
Insight from a Good Friend:
In order to gain further insight into my dilemma, I sought the advice of a close friend. According to my friend, merely relying on conventional employment or broad-based ETFs may not provide the same opportunities for wealth accumulation as investing in alternative options such as real estate. They emphasized that taking risks and exploring different avenues can lead to greater financial success. This perspective challenges my reservations about rental property investment and encourages me to seriously consider the potential benefits it could bring.
Seeking Others’ Experiences:
Now, I am curious to hear about the experiences of others who have faced a similar decision. If you have relevant experience or insights, I would greatly appreciate your input. Please share your thoughts and opinions, as they will play a crucial role in aiding my decision-making process.
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****** just grabbed a
Your friend is a liar. The stock market is one of the best wealth generators out there. Only thing that inflates the perceived returns in housing is that you are using leverage to buy the asset.
If you used that same 50k and leveraged it to buy 400k worth of REIT’s, you would arguably have a similar or better rate of return as a rental. Plus you would not be concentrated on one home, in one neighborhood, in one city.
Is the goal to get “rich” or “funded retirement”? I think both require different approaches. The former involves taking risks (calculated but higher risk) chances like real estate and if planned correctly maybe you build a small real estate empire. But you could also end up broke with zero retirement fund. The latter probably doesn’t have the high end wealth generation persay at the end (could but by default is average) but much less chance of bust over the long haul and relatively safe way to have enough funds to end up with enough for a comphy retirement.
My 2 cents anyway.
You realize your investment is actually a second job as a landlord, right? Think about whether you want to do that on top of your 60 hours/week, because there will definitely be work to be done, things to repair, etc.
Or you dump it into XEQT and be done in 5 minutes. You will still come out ahead, despite what your friend says.
My ETFs don’t call me with issues, and pay their dividends on time. They also don’t shit all over the place or wreck the bank account. I also don’t have to take them to the housing court when I go to sell them.
Your friend is an over opinionated idiot and should know when to close his mouth as there seems to be garbage spewing from it. Unless he’s Warren Buffett, he’s irrelevant.
Even if you assumed the rate of return were the same (which they aren’t) the tax implication and property management alone will make your TFSA investments more worthwhile.
Would you be cashflow positive at market rents?
Sorry, located in Ontario,
how are you planning to be a landlord if youÔÇÖre already working 12h a day?
I never had (and still donÔÇÖt) the patience to deal with renters. You could buy a speculative vacant property if you think property values will continue to increase at the rate theyÔÇÖre going and still not deal with renters.
If I were you Id be going ETFs (and I am doing so as well!) at present and see what the next few years brings but heck, maybe Im wrong and housing triples again in the next 10 years?!?
I had two rental properties for quite a while, and I regret putting my money in real estate instead of indexed ETF’s. If I had spent the same amount of money on the ETF’s I would have considerably more wealth, and I wouldn’t have had to spend my time managing the properties, nor would I have had to deal with any of the headaches inherent with owning rental properties.
I would go for a globally diversified and indexed ETF myself.
ETFs all the way. No regrets and my retirement will be sweet.
[https://ca.rbcwealthmanagement.com/fjwealth/blog/3490853-canadian-real-estate-vs-stocks-2022](https://ca.rbcwealthmanagement.com/fjwealth/blog/3490853-canadian-real-estate-vs-stocks-2022) And in US and other global markets, ahead of real estate investing.
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I bought my house in 2018 and started saving to buy a triplex at my mortgage renewal. I’ve now realised that it is too late and everything is in XEQT. Even if rent went up, with how much the price of the triplex went up with those high interest, and taking into account all other expense i would be down like 2k a month in cash flow. I can’t sustain that even if i wanted too. Could have took a 500$-750$ negative cash flow per month for the first few year but can’t risk going 24k negative per year and that is without having taking into account having issue with getting paid or a bad tenant destroying property.
In general all investing has a risk vs reward ratio, anything with a good risk/reward ratio is a good investment if you can tolerate that risk level. Rentals can have a good risk/reward ratio if you know what your doing, but because lots of landlords don’t and they get completely wrecked by shity tenants and theory own inability to do things properly.
I have zero interest in a rental property. Less human in the equation the better so I stick with the stock market.
I donÔÇÖt need to be rich, just more than comfortable for my lifestyle.
Another consideration (IMO) is future plans with the rental.
Example: if you plan to give to a child (or let adult children be tenant in it) in say ten or twenty years, then I think there’s a good case for it as a way to support the next gen.
Kind of did this, someone was interested in renting our house that was for sale 4-5 years ago. We passed in favour of keeping investments invested (we would have needed to empty our TFSAÔÇÖs to afford the downpayment on our new house).
No regrets. Yeah we might have been slightly further better off since prices exploded, but weÔÇÖre still on track for retirement at a decent age, and my ETFÔÇÖs donÔÇÖt call at night to say the sump pump failed and thereÔÇÖs 2ÔÇØ of water in the basement (which had happened at that house).
But then I look at having to pay capital gains on the price of the house and the renters being ÔÇ£locked inÔÇØ much lower rent than current market rent (rent prices exploded as well, and the people who bought the house still live there) with rising mortgage interest rates, and I wonder maybe we made the right decision.
No.
damn 60h/wk for 130k/yr